Hempstead

Southwestern Electric Power Co (SWEPCO), a subsidiary of American Electric Power, has proposed a 600 MW coal plant - Hempstead, also known as the John W. Turk Jr. Power Plant, that would utilize ultra-supercritical technology and burn coal from Wyoming’s Powder River Basin. The plant would serve Arkansas as well as Texas and Louisiana. It would sit north of Fulton, Arkansas, about 15 miles northeast of Texarkana, near some of the state’s last cypress swamps and forest. According to the Sierra Club, SWEPCO filed for a PSD permit with the Arkansas Department of Environmental Quality in August 2006.

SWEPCO filed an application for a Certificate of Environmental Compatibility and Public Need with the Arkansas Public Service Commission, and the commission approved the project with a 2-1 vote on Nov. 21, 2007 – over opposition from environmental groups, hunting groups, and some area landowners. The project still awaits final approval by the state Department of Environmental Quality, the U.S. Army Corps of Engineers, and regulators in Texas.

In January 2008, an administrative law judge recommended that Texas regulators reject SWEPCO's proposal, saying that the company had failed to prove a need for the plant. Without Texas approval, SWEPCO could not raise its rates in the state, but the company has said it will move forward regardless of the decision. The proposal also requires approval by Louisiana regulators. In March 2008, the Louisiana Public Service Commission approved SWEPCO's construction permit application for the plant.

In May 2008, the Hempstead County Hunting Club filed a lawsuit against SWEPCO to block construction activities at the plant site. The company has begun clearing trees and delivering construction materials without having received a permit from the Arkansas DEQ. A federal judge in Arkansas chose not to issue a temporary restraining order, but scheduled a June hearing on the case.

In July 2008, the Texas Public Utility Commission approved SWEPCO's permit application to build the new plant, overturning the administrative law judge's recommendation by a vote of 2-1. At the time of this decision, SWEPCO was still waiting to receive several permits, including the air permit from the Arkansas DEQ. The company expects to receive the air permit by the third quarter of 2008.

The East Texas Electric Cooperative, which wants to purchase a share in the plant, was turned away by the Rural Utilities Service when the agency issued a moratorium on new loans for coal-fired power plants in early 2008. The co-op filed a federal lawsuit over the moratorium and is seeking alternate financing from the National Rural Utilities Cooperative Finance Corporation (CFC) at a slightly higher rate than the original RUS loan.

On July 3, 2008, the Texas Public Utility Commission (PUC) agreed to allow SWEPCO to pass along an some of the costs of the plant to Texas customers, estimated at up to $500 million. On July 10, US District Judge Harry Barnes denied Hempstead County Hunting Club's request for a temporary restraining order against SWEPCO. On July 18, the Army Corps of Engineers and ADEQ issued a Public Notice stating that they are considering an application for a 404 permit to fill approximately 8 acres of wetlands on the 2,800 acre plant site. In addition,the proposed transmission lines for the plant would impact approximately 200 acres of wetlands and 1.4 acres of stream channels. Also in July, the Sierra Club petitioned to intervene in a case challenging SWEPCO's Certificate of Environmental Compatibility and Public Need (CECPN) to construct more transmission lines to the Hempstead plant. Initially, the Hempstead County Hunting Club intervened, arguing that the transmission lines would greatly harm a biologically significant area. SWEPCO has applied for three certificates for three separate transmission lines.

On August 11, 2008 ADEQ issued a draft Maximum Achievable Control Technology (MACT) permit for the Hempstead plant, which requires SWEPCO to regulate mercury and other Hazardous Air Pollutants (HAPs) emissions. Also in August, the Arkansas Public Service Commission (PSC) issued an order granting Sierra Club and the National Audubon Society's intervention in the transmission lines case. A public hearing on the transmission lines will be held on October 27. On August 26, the Sierra Club submitted a letter to the US Department of Agriculture (USDA) and its Rural Utilities Service (RUS), claiming that they are in violation of federal law by approving investments in a number of new coal-fired projects without assessing environmental impacts under the National Environmental Policy Act (NEPA). The plants in question include the proposed Hempstead Turk plant and the Plum Point Energy Station. On September 25, East Texas Electric Cooperative (ETEC) filed a suit against the Sierra Club and USDA, claiming that USDA failed to process approvals related to the plants due to the threat of legal action.

On September 25, 2008 the Arkansas Governor's Commission on Global Warming adopted a recommendation that no new coal plants be built in the state until carbon sequestration technology is ready.

In December 2008, Governor Beebe met with environmental groups opposed to the Hempstead plant. The groups delivered more than 3,700 petitions asking for a moratorium on new plants in the state. However, the Governor said that he doesn't have the authority to issue such a moratorium. A member of the Governor's Commission on Global Warming, which developed a list of strategies to slash the state's CO2 emissions, said that the panel's work would become pointless if the new plant is built. Rob Fisher, executive director of the Ecological Conservation Organization, said, "All the work we did and the recommendations we came up with will be completely negated by this coal plant. All of the work of this commission will be completely in vain." The American Coalition for Clean Coal Electricity (ACCCE) issued a statement thanking the governor for not issuing the moratorium.

On February 11, 2009, Sierra Club and Environmental Integrity Project (EIP) filed a notice of intent to sue the EPA for failing to respond to the groups' Title V petition.

On March 19, 2009, SWEPCO was ordered to stop construction on a portion of wetlands at the plant site. According to SWEPCO, the wetlands were accidentally cleared before receiving the required 404 permit from the US Army Corps of Engineers. SWEPCO's 404 permit is on hold pending an EPA decision on the matter.

In May 2009, a group of landowners appealed the state Public Service Commission's decision to move forward with the plant. Lawyers for the group challenging the plant argued that the PSC acted improperly by approving the need for the plant without hearing arguments for and against the project. The state Court of Appeals heard oral arguments on May 13.

On June 18, 2009, hearings concluded on challenges to the plant's air permit. Both sides have an August 21 deadline to file post-hearing briefs. Response briefs are due by September 11. Michael O'Malley, who is overseeing the hearing, will make a recommendation to the Pollution Control and Ecology Commission, although he did not give a timeline for when he expects to issue his decision. O'Malley denied a motion from the Arkansas DEQ and SWEPCO for an immediate ruling. On June 24, 2009, the state Court of Appeals sided with landowners and rejected SWEPCO's Certificate of Environmental Compatibility and Public Need for the new plant. In its ruling, the court said that the PSC did not adequately review the project before approving the certificate. On July 8, SWEPCO petitioned the Arkansas Supreme Court to review the Court of Appeals' ruling.

On August 26, 2009, Sierra Club and the National Audubon Society petitioned the Arkansas Pollution Control & Ecology Commission to deny SWEPCO's air permit or stop construction of the Turk plant. The Commission denied the motion on September 25.

On December 9, 2009, hearing officer Michael O'Malley recommended approval of the plant's final air permit to the Arkansas Pollution Control and Ecology Commission. On December 15, 2009, EPA issued an order in response to a petition from the Sierra Club, Environmental Integrity Project and Audubon, ruling that the Arkansas DEQ's justification for not considering integrated gasification combined cycle (IGCC) technology in the permit's best available control technology (BACT) analysis was inadequate.

In January 2010, the Arkansas Pollution Control and Ecology Commission approved Hempstead's air permit. Sierra Club attorneys vowed to continue fighting the plant. SWEPCO's challenge to the state Court of Appeals' ruling - that invalidated the Certificate of Environmental Compatibility and Public Need for the John W. Turk, Jr. Power Plant - is still pending before the state Supreme Court.

In February 2010, Sierra Club and Audubon filed a federal lawsuit against the U.S. Army Corps of Engineers for failing to comply with the National Environmental Policy Act and Clean Water Act in issuing a permit to SWEPCO to fill wetlands and remove water from the Little River on the Turk plant site, arguing the Corps did not adequately consider the Turk plant's cumulative environmental impacts before issuing the permit and the risk posed to the ecosystem and wetlands on site.

On April 15, 2010, the Arkansas Supreme Court will hear oral arguments in SWEPCO's appeal of the ruling that invalidated the Certificate of Environmental Compatibility and Public Need for the Turk plant.

On May 13, 2010, Arkansas' highest court unanimously sided with the appeals court that had reversed the Public Service Commission's (PSC) decision to grant a permit, sending the case back to the PSC. The ruling, which upheld a similar ruling by the state appeals court last year, found that regulators did not conduct a proper permit hearing, siding with opponents of the plant who argued the commission violated state law by considering the need for the plant in a separate proceeding before considering whether to permit it. According to Chuck Nestrud, an attorney representing opponents of the plant, SWEPCO would have to reapply for the permit to allow the plant to proceed. If SWEPCO reapplies for a Certificate of Environmental Compatibility and Public Need (CECPN), the public would then have the opportunity to comment on the need for Turk.

On June 24, 2010, SWEPCO announced that construction of the John W. Turk, Jr. Power Plant will proceed. With the court's May 13 reversal, SWEPCO no longer has a Certificate of Environmental Compatibility and Public Need (CECPN) to serve the its Arkansas retail customers, and SWEPCO will now pursue selling the power designated to Arkansas retail customers into other markets. In other words, rather than recover Turk-related costs through customer bills, SWEPCO will sell 88 megawatts previously designated to supply Arkansas customers into the wholesale market as allowed by state law, the company said in a release. SWEPCO owns 440 MW of the 600-MW capacity, and approximately 88 MW was allocated for SWEPCO's retail customers in Arkansas.

AEP chairman, president, and chief executive officer stated, "This decision means we will not be able to use electricity supplied by the Turk plant to serve SWEPCO's retail customers in Arkansas, as was originally planned in this important project. But the Turk Plant will also serve SWEPCO's retail customers in Louisiana and Texas, where the plant has received regulatory approval. We will continue construction in order to fulfill our obligations in Louisiana and Texas in the most cost-effective manner. We will secure other markets for the 88 megawatts of Turk Plant capacity that would have served our Arkansas retail customers." Construction of the plant was also approved by the Louisiana Public Service Commission and Public Utility Commission of Texas in March 2008 and July 2008, respectively, to serve SWEPCO's Louisiana and Texas customers.

As of June 2010, SWEPCO's projected completion date for the project was October 2012, and the estimated cost is $1.7 billion. SWEPCO stated that approximately $1.01 billion had been spent on the project, including $786 million by SWEPCO for its 73 percent share of the plant, as of May, 31, 2010. Furthermore, SWEPCO and the joint owners have an additional $436 million in contractual commitments for the plant.

On July 16, 2010, the Sierra Club and Arkansas Audubon filed a motion in the U.S. District Court in Texarkanaare asking a federal judge to issue a temporary restraining order to halt construction of the Turk plant. They asked for an expedited hearing, arguing that wetlands at the plant’s construction site in Hempstead County are in immediate danger of irreparable harm. SWEPCO spokesman Peter Main said the company intends to continue with construction so it can meet its commitments: “A temporary restraining order is an extraordinary remedy that is rarely ordered by the courts, and we do not believe the plaintiffs have satisfied the high standards required to support such an order,” he said.

On October 27, 2010, Judge William R. Wilson issued a preliminary injunction on construction work at SWEPCO's related to its Corps of Engineers-issued water permit, which states it cannot dredge, fill, or build an intake structure or work on power lines crossing rivers. While the preliminary injunction applies only to wetlands work, Wilson commented about broader issues related to the plant, remarking, "There is no other evidence of need — outside of SWEPCO’s bare assertions — anywhere in the record." Wilson noted appellate court's reversal of the PSC approval of the plant because of lack of sufficient environmental assessment.

On November 24, 2010, the 8th U.S. Circuit of Appeals in St. Louis overruled Wilson in a one-sentence order, granting SWEPCO a stay of the preliminary injunction. One of the parties that filed suit, the Hempstead County Hunting Club against SWEPCO, filed a 387-page motion with the 8th Circuit on Dec. 7, 2010. Wilson recused himself because, he said, "Having been given no guidance by the 8th Circuit as to where I went wrong, I believe my time would be better spent working on other cases that need attention.” He did ask the appeals court to reconsider its stay of his preliminary injunction. The schedule to file briefs before the 8th Circuit extends to Feb. 7, 2011, and any decision by the appeals court would come some time after that.

On May 16, 2011, a public hearing was held over SWEPCO's application for a solid waste permit for the plant, to address whether the Arkansas Department of Environmental Quality should issue a solid waste permit for a coal ash landfill at the plant site. The previous week, Gov. Mike Beebe said he disagreed with SWEPCO's argument that a new law meant plant opponents must first appeal through the Public Service Commission before seeking relief in court, saying the law is not retroactive, and thus doesn't apply to the Hempstead County plant.

On May 26, 2011, the Arkansas Supreme Court said opponents of the plant must appeal to state regulators at the the Arkansas Public Service Commission before suing in federal court. Opponents of the plant had argued that state law allowed them to pursue their claims either before the commission or in court and that they shouldn't be forced to choose one over the other. Justices however said that they could sue only after they had exhausted all administrative remedies.

Project Details
Sponsor: Southwestern Electric Power Co. (AEP subsidiary) Location: Hempstead County, AR Capacity: 600 MW Type: ultra-supercritical Projected in service: 2012 Status: Awaiting DEQ approval; construction begun Ownership shares: SWEPCO (73% or 440 MW), Oklahoma Municipal Power Authority (7% or 40 MW), East Texas Electric Co-op Inc. (8% or 50 MW), and the Arkansas Electric Cooperative Corp. (12% or 70 MW).

Financing

 * Citigroup
 * JP Morgan Chase
 * Goldman Sachs

Citizen Groups

 * Arkansas Sierra Club, Dina Nash, dina_nash [at] yahoo.com

Related SourceWatch resources

 * Carbon Capture and Storage
 * Existing U.S. Coal Plants
 * US proposed coal plants (both active and cancelled)
 * Coal plants cancelled in 2007
 * Coal plants cancelled in 2008
 * Arkansas and coal
 * Texas and coal
 * Profiles of other states (or click on the map)